Revenue share as a model for the future and fairness

Posted on Jun 20, 2014 in Blog, Vuemakers

Monetizing content is a subject of concern to content delivery companies from Forbes to Netflix.  In the world of social media, it’s no different. Facebook’s Q4 earnings for 2013 showed that it made 53% ($1.37 billion) of it’s revenue from mobile ads served on it’s mobile app.  Twitter made $595 million on ad revenue for 2013 + $70 on selling data and licensing. And while Facebook does not currently break out revenues for Instagram, analysts have estimated that Instagram pulled in as much as $340 million for the year for Facebook. There is obviously plenty of money to be made in selling advertising on social media. But to who’s benefit?

Social media is a celebrity-driven industry, mostly lead by music artists. Half (49%) of the top 100 accounts on Twitter are music artists. If you include actors/talk show hosts, professional athletes and comedians, that number jumps to 74. Those entertainers are generating the page views for Facebook, Twitter and Instagram so that these companies can enjoy all of those advertising dollars. But the companies are making that money on the backs of the entertainers. And the entertainers are not receiving any direct financial benefit from their efforts on those platforms.

But, ad revenues are dropping from year to year according to research firm eMarketer, while subscription-based services like Hulu, Spotify, and Pandora are thriving. And those companies actually pay out royalties to the content providers and entertainers. There are upstart social networks attempting to do the same; UpFront and Hang W/. Hang W/ plans to share advertising revenue with content producers, not only to the entertainers, but to anyone who can gain a large enough following. Those ads appear before a video or stream plays (called pre-roll advertising). UpFront uses a subscription service and has no ads. They split revenue of the subscriptions with the celebrity in a 70/30 split, with UpFront taking 30% and taking care of the infrastructure costs. Currently, there is not a lot of activity on UpFront, but Hang W/ is gaining some ground because it is an open network.

How does this compare with Vueit? We are utilizing a subscription model on a private network and the photos and videos offered by the celebrities are exclusive to Vueit. They are not shared across the open social networks like Twitter or Instagram. We have a  tiered revenue split with celebrities (Vuemakers) giving them the ability to earn between 20% and 50% based upon how many subscribers (Vuers) they have. Pay outs do not occur every month or every quarter, but twice a month. Vueit is for the super fan, not the passive fan, like on the open networks. And because of that, our Vuemakers are incentivized to provide them with exclusive and real connections and not a series of different ways to take a selfie. Sharing the revenues with these Vuemakers that are generating the revenue makes sense for the future of premium social media and for fairness.